Question
It remains imperative for businesses to incorporate absorption variances within costs to ensure the production of products continues based on market fluctuations. The prevention of
It remains imperative for businesses to incorporate absorption variances within costs to ensure the production of products continues based on market fluctuations. The prevention of uninterrupted products are prevented by introducing absorption costs as businesses absorb the impacts of higher pricing on for instance on raw materials due to a shortage of supply. Analysing an article by (Misund,2016), for instance, Gas Prices remain volatile due to a shortage of supply in the UK causing prices to fluctuate, in this case comparatively, businesses would have to increase costs and pass over to customers in order to absorb the current epidemic. The supply and demand of products are volatile chains of trade as they remain vulnerable to price fluctuations such as the scenario illustrated. Businesses would have to implement controlled measures to ensure prices remain within capacity and source materials that do not extend beyond it's markets purchasing power. Can you think of industries in which purchasing power of customers remain vulnerable due to economic impacts such as natural shortages of materials or pandemics? How does this impact the costing of products, how might businesses prevent or pass over these unavoidable costs over to consumers?
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